The New York City Mansion Tax represents a significant buyer closing cost that varies between 1% to 3.9% of the total purchase price. This tax specifically applies to residential real estate transactions where the purchase price is $1 million or greater within the five boroughs of New York City. Essentially, the Mansion Tax is incorporated into the broader framework of real estate transfer taxes that New York State levies on the sale or transfer of property, making it a crucial component of the financial landscape for high-value real estate transactions.
Initially instituted in 1989, the Mansion Tax was designed as a straightforward 1% Transfer Tax on the purchase of properties valued at $1 million or above. This tax was intended to target luxury real estate purchases, reflecting the growing market for high-end housing options. However, unlike many taxes that are periodically adjusted to account for inflation and changing economic conditions, the Mansion Tax had remained static since its inception. It was not until April 2020, when significant revisions were implemented as a part of the New York State Budget, that the tax structure underwent a comprehensive revision. This overhaul aimed to modernize the tax rates and brackets, thereby reflecting the contemporary real estate market dynamics and increasing property values within New York City.
NYC Mansion Tax Rates:
· 1% for purchases of $1,000,000 to $1,999,999
· 1.25% for purchase of $2,000,000 to $2,999,999
· 1.5% for purchases of $3,000,000 to $4,999,999
· 2.25% for purchases of $5,000,000 to $9,999,999
· 3.25% for purchases of $10,000,000 to $14,999,999
· 3.5% for purchases of $15,000,000 to $19,999,999
· 3.75% for purchases of $20,000,000 to $24,999,999
· 3.90% for purchases of $25,000,000 and above
